Human immunodeficiency virus type 1 (HIV-1) encodes the transactivating protein Tat, which is essential for virus replication and progression of HIV disease. Tat has multiple domains and consequently the molecular mechanisms by which Tat regulates viral and cellular gene expression are complex. We have demonstrated that Tat-dependent transcription takes place in a cell cycle-dependent manner and that Tat is capable of promoting gene expression in two distinct stages of the cell cycle. Tat-dependent LTR activation is observed in late G1/early S phase. This activation is TAR-dependent and requires a functional Sp1 binding site. A second phase of transactivation by Tat is observed in late G2. This later phase of transcription is enhanced by a natural cell cycle blocker of HIV-1, vpr, which arrests infected cells at the G2/M boundary. Using a series of deletion constructs, we find that Tat-dependent G1/S activation is Sp1-dependent. Our studies suggest that retroviral activators may perform distinct functions of activation during different stages of cell cycle. Tat stimulates human immunodeficiency virus type 1 (HIV-1) transcriptional elongation by recruitment of CTD kinases to the HIV-1 promoter. Using an immobilized DNA template assay, we have analysed the effect of Tat on kinase activity during the initiation and elongation phases of HIV-1 transcription. Our results demonstrate that CDK7 (TFIIH) and CDK9 (P-TEFb) both associate with the HIV-1 pre-initiation complex. Hyperphosphorylation of the RNAP II CTD in the HIV-1 pre-initiation complex, in the absence of Tat, takes place at CTD Serine 2 and Serine 5. Analysis of pre-initiation complexes formed in immunodepleted extracts suggest that CDK9 phosphorylates Serine 2 while CDK7 phosphorylates Serine 5. Remarkably, in the presence of Tat, the substrate specificity of CDK9 is altered such that the kinase phosphorylates both Serine 2 and Serine 5. Tat-induced CTD phosphorylation by CDK9 is strongly inhibited by low concentrations of 5,6-Dichloro-1-b-D-ribofuranosylbenzimidazole (DRB), a inhibitor of transcription elongation by RNAP II. Analysis of stalled transcription elongation complexes demonstrates that CDK7 is released from the transcription complex between +14 and +36, prior to the synthesis of TAR RNA. In contrast, CDK9 stays associated with the complex through +79. Analysis of CTD phosphorylation indicates a biphasic modification pattern, one in the pre-initiation complex and the other between +36 and +79. The second phase of CTD phosphorylation is Tat-dependent and TAR-dependent. These studies suggest that the ability of Tat to increase transcriptional elongation may be due to its ability to modify the substrate specificity of the CDK9 complex.